Empric portfolio valuation rises to £818m

By James Buckley - Tuesday, September 12, 2017 9:51

Empiric Student Property posted a rise in the value of its property portfolio for the six months to 30 June 2017 to £817.9m, up from £721.3m at the end of last year.

The group recorded an operating profit of £20.2m over the period, exactly the same as the same time last year and posted £24.5m in rental income from standing assets.

The company’s loan to value ratio at 30 June 2017 was 36.0%, with a weighted average term to maturity for the debt of 7.1 years and weighted average interest payable of 3.42%.

Empiric agreed a new £10m three-year unsecured loan over the six months, which has been drawn down. The firm has 90 assets in 30 prime university cities and towns at 30 June 2017, 75 of which were operational and 15 more for later years.

It also had 6,833 operational or revenue generating beds at 30 June 2017 with additional 758 due to be operational for the 2017/18 academic year, and 1,171 for later years.

The Rt Hon Baroness Dean of Thornton-le-Fylde, Chairman of Empiric Student Property, said: “More students demanding a bed in purpose built accommodation coupled with pressures on local housing markets means that demand for PBSA remains strong. The details of the UK’s exit from the European Union remain unclear but the UK Government recognises the importance of the continued success of the higher education sector.

“Around 23% of students in the UK are international, of which nearly 7% are from the EU. Many are postgraduates who come to the UK for 12 months or less, which means they should not be affected by post-Brexit limits on immigration, which would apply to those coming here for more than one year.

The student accommodation market remains highly attractive and we have the strategy, pipeline, financial resources, management team and people to continue to grow the business successfully in the second half of the year and into the future. In summary, we are optimistic about Empiric’s prospects in the remainder of 2017 and beyond.”

Paul Hadaway, chief executive officer, Empiric, said there was a clear opportunity to diversify the business into the second and third year graduate market.

"Last Autumn we began roadshowing our 2025 plan diversifying into different segments of the student property market. Our core has clearly been studio buildings which go very well with post grads and international students but 18 months ago it became clear that a really big market is building for the second and third year students who are in the UK in huge numbers. Whether it is served with premium housing or affordable housing it is clear they would pay more if there was something tcheaper, cooler and better located.

"That plan that we roadshowed last Autumn went to shareholder vote and there was 97% support for it.

"We plan to raise funds and every year acquire 2 or 3,000 beds  - three years at 9,500. By focusing on development either direct or forward funded we are able to build to spec."

Haddaway said the group is sitting on a really interesting pipeline but is also finding it easier to source opportunities.

"Many people coming to us direct or doing second deals with us."

jbuckley@costar.co.uk

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